Feb 02 - 08, 2009

Balochistan's vast coal reserves can be utilized for energy generation. About one percent local coal is presently utilized by coal-based power stations. Need is to increase the share of Balochistan coal in the country's energy mix, as the government has already decided to increase the share of coal in the country's energy mix from 7.6 percent to 18 percent by the year 2018.

Balochistan government plans to setup 50 megawatts coal-fired power plants in the province to overcome power shortage. A Memorandum of Understanding (MoU) was recently signed by Balochistan government with a Canadian firm for setting up 50 megawatts coal-fired power plants by utilizing locally extracted coal. Under the deal, Balochistan Power Generation Limited (BPG) and Canadian Everlight Energy Corporation (EEC) would prepare feasibility of the project and submit it to Provincial Thermal Power Board for review. The Board would settle matters relating to tariff and supply of electricity between Quetta Electric Supply Company (QESCO) and these companies after the submission of the project's feasibility report. The companies would be bound to spend five percent of their total revenue on development of social sector in the areas where they supply power.

There is no significant consumption of electricity for industrial purpose, as the province lacks a sound industrial base. The power consumption is largely for domestic purpose. Being the least populous province, Balochistan consumes the least power, as compared to other provinces of the country. According to one estimate, the province's total power needs does not go beyond 1500 mega watts, and the coastal areas get electricity from Iran. On the other hand, Karachi city needs 2500 mega watt of power to continue its industrial, commercial and social life in a normal way. Frequent electricity load shedding in rural Balochistan is affecting the farming community and the agriculture, which is the mainstay for over 75 percent of the local population. According to one estimate, about 229824 hectares of area in the province is irrigated by tub-wells, which have become non-functional due to the frequent load shedding by QESCO.

Mekran coastal areas have largely been dependent on Iran for electricity requirements. Iran is already supplying electricity through its 132KV line to Mekran, whose requirement is estimated at 17.5MW. Presently, 35MW power is being imported from Iran through Mand interconnection on 132 KV, Tuftan 2MW on 20KV and Mashkehl 2MW on 20KV. As a part of government's long-term power strategy, a grid station is under construction in Gwadar. Moreover, 132 KV transmission line from Pasni/Turbat is being extended to Gwadar at a cost of Rs360 million. Eventually, Gwadar will be linked to the national grid as soon as the demand grows for power consumption.

The power shortage should be tackled through efficient power management, both under long-term and short-term programs. The QESCO needs to take immediate measures to tackle the load shedding problems in urban and rural areas of the province. Steps need to be taken for using Balochistan coal for energy generation purpose.

The province is the biggest coal producer in the country yielding more than 2 million tons a year, according to the official sources. For the current financial year, the provincial government has allocated Rs154 million for the development of mineral sector. The provincial income from mining activities increased from Rs100 million to Rs500 million during last financial year.

The province possesses huge reserves of coal at Harnai, Degari, Mach, Ziarat, Chamalang and Abegum. The estimated reserves of all coal fields in the province are 217 million tons. The 60km-long Chamalang coal mines contain coal ranging from high volatile C bituminous to high Volatile A bituminous with a total resource of six million tons.

Chamalang coal mine project is likely to provide jobs to 25,000 people. Nearly 200-250 loaded trucks of coal leave daily for different areas of Pakistan from Chamalang mines in Balochistan. Supply of coal from Chamalang mines in Balochistan started with the first convoy of loaded trucks left for different areas of the country in March 2007. The Chamalang-Mekhtar track had been made operational for heavy traffic enabling coal trucks to go to other areas. The tribal rivalry in the area during the last three decades had obstructed the mining of coal in Chamalang. The Luni and Marri tribes had been at war over the ownership of the mines. The mines were made operational following the tripartite agreement between the Marri and Luni tribes and mine contractors on December 12, 2006. According to a rough estimate, the profit from the supply of coal from Chamalang mines would be worth Rs30 billion per annum.

Coal mining sector in the province needs some tax incentives for its development from the federal government. Federal Board of Revenue should amend income tax rules and allow 100 percent write-off on expenditure incurred on mining operations. Other tax incentives, which may be given to the mining sector include the permission for duty-free import of mining machinery, equipment, and transportation trucks, withdrawal of GST on coal for at least five years, bank loans at three percent interest rate and the removal of the condition that the depletion allowance should not exceed 50 percent of the total amount invested..

Balochistan produces coal of good quality that can be used for power generation and in different industries for heating purpose. Presently, over 80 percent of the local production of coal is being utilized by bricks makers, while the rest are being consumed by cement makers to blend it with the imported coal to reduce the cost of production. In view of the rapidly mounting Pakistan's energy deficit, there is a high need to turn the province's coal-mining sector into a modern mechanized industry. Investment in coalmine sector would not only accelerate economic activities in the province but also save the foreign exchange. The investments can be made for establishing coal-washing plants. Raw coal contains different impurities like sulpher, calcite, clay, rock and shale. This impure coal cannot be utilized in the industry hence impurities must be washed out. For saving energy and cost, there is a need to set up coal washing plants in the province.

Hamai 76
Sor Range-Degari 50
Duki 50
Mach-Abegum 23
Pir Ismail Ziarat 12
Chamalang 6
Sub-Total 217